Real Estate Investing Pitfalls and How to Avoid Them

When it comes to real estate investing, there are many problem areas that investors encountered. These are a few of the major pitfalls I see people falling into on their real estate investing journey. Now, this isn’t all of them but these are the most relevant ones to consider.

Pitfall 1: Getting Taken Advantage by an Agent

Real estate agents usually seem to know everything in the market. They have mastered persuasion tricks and express their message compellingly. As a result, many potential investors take their message as gospel truth.

What many real estate investors may not know is that some agents just want to get some property off their hands. They will not present the ultimate truth to the investors. Therefore, investors should know their investment priorities, the kind of homes they are looking for and the property location they are targeting. The investors should, therefore, conduct their own research, understand the market history, explore their neighborhoods scrupulously and make their investments only when necessary.

HOW TO AVOID: The biggest piece of advice I would recommend for this would be to get a trustworthy real estate agent. It is extremely important to ensure you do your research on everyone involved in any potential deal to ensure you

Pitfall 2: The Stock Market Approach

Real estate pays huge profits when the investment takes a longer period of time. Typically, the values of the homes appreciate with time and are more likely to pull higher returns. Nonetheless, some real estate investors think that property investment must be managed the way stock markets are managed.

Such investors buy homes when prices fall and sell them when prices increase. It is an approach which may result into slim profit margins that fall short of the investors’ targets.

HOW TO AVOID: This one is the biggest one in my opinion. You have to trust you agents and be in it for the long haul. Real estate investors should act with patience and only sell their property when the targeted profits can be made.

Pitfall 3: Limiting Yourself to Your Own Backyard

When looking for locations to invest in residential real estate, many investors simply look to their own backyard. While there might be some good investments nearby, you could be missing out on better investment opportunities across the country, especially if home prices in your neighborhood are above the national average.

HOW TO AVOID: Remote investing allows you to purchase residential real estate in markets throughout the U.S., therefore making it easier to find properties that fit your investment goals, initial investment amount, and more. By working with a partner who will help you find these markets as well as manage the properties, you’ll reap the benefits. This means investing in markets that are poised for growth, houses below the national average, and/or have a solid cash-on-cash return.